Unemployment Unemployment Definition – someone over Definition – someone over 15 years of age not 15 years of age not working but actively working but actively seeking work. One hour of seeking work. One hour of paid work per week is paid work per week is considered as employment. considered as employment.

Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

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Page 1: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

UnemploymentUnemployment

Definition – someone over 15 Definition – someone over 15 years of age not working but years of age not working but actively seeking work. One hour of actively seeking work. One hour of paid work per week is considered paid work per week is considered as employment.as employment.

Page 2: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

• Labour force = employed + unemployed

• Participation rate = % of working age pop employed + unemployed (15 years +)

• Unemployment rate = % of labour force unemployed…around 5.5%recently

Page 3: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

Causes / TypesCauses / Types

• Cyclical factors- recession (derived demand for labour)

• Structural change – tariff cuts and globalisation/ technology

• Frictional – changing jobs

• Seasonal

Page 4: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

Other issues Other issues • Hidden U – is it really unemployment?

• Long term U = U for over 12 months

• Underemployment – what is it and is it a problem?

• Technological change/ productivity

• Wages growth

• Labour market inflexibility

• Rising participation

Page 5: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

Natural U Natural U • Natural U = Full employment ????

Cyclical U is zero due to economic growth.

The remaining unemployment is structural.

To reduce the natural rate of U workers

need to be retrained.

• NAIRU = Non- Accelerating Inflation Rate

of Unemployment

Phillips Curve is vertical at NAIRU

Page 6: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

ImpactImpact

Economic costs

- Economy operating below full capacity

- Lower living standards

- Loss of skills and long term unemployment

- Govt expenditure increases

Page 7: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

• Social Costs

- Increased income inequality

- Family breakdown

- Crime

- Homelessness

- Debt levels increase

Page 8: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

Unemployment of GroupsUnemployment of Groups

• Youth Unemployment (15-19 years) is 3 times the national average

• Indigenous Unemployment rate is 16%

• Older workers tend to be the long term unemployed

• Rural areas have a higher unemployment rate – usually about 1% higher than urban areas

Page 9: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

PoliciesPolicies

• Page 197- 199• How can macroeconomic policies reduce unemployment? ( explain

the role of Monetary and Fiscal Policy)• Have macroeconomic policies been successful in Australia?• Why are microeconomic policies important for reducing the natural

rate of unemployment further?• What is meant by a ‘more flexible labour market’? What is meant by

‘labour market policies’? • Why are labour market policies considered microeconomic policies?

Page 10: Unemployment Definition – someone over 15 years of age not working but actively seeking work. One hour of paid work per week is considered as employment

Page 343-347 Why is education & training necessary to decrease unemployment? List examples of recent policies to increase productivity. What is the role of Centrelink?Explain the role of ‘Job Services Australia’?Why is ‘work for the dole’ an example of mutual obligation?Why is improving the skills of the workforce a priority for the government?